Utility giant SSE has announced plans to cut 500 jobs and scale back investment in renewable energy as part of the wider drive to freeze retail gas and electricity prices until 2016.

The Perth-based company warned shareholders profits would be lower going forward as a result and it will “streamline” the business to cover shortfalls resulting from its price freeze.

The group said today it will look to cut £100 million a year in costs out of the business and will also reduce annual investment from £1.6 billion in the 2014/15 year to £1.3 billion – net of disposals – in the three years to March 2018.

SSE chief executive Alistair Phillips-Davies said the energy price freeze would knock £100 million off profits for 2015.

He said: “We felt we needed to make a bold statement.

“It's all about making sure that we listen to customers, that we show that we are responsive to customers and so we have clearly said we will have to accept lower profits.”

Ann Robinson, director of consumer policy at utility price comparison website uSwitch.com, described the announcement as a “U-turn to be applauded”.

She added: “SSE was the last supplier to pass on the government's levy cuts and reduce customer bills this winter – now they are the first to freeze prices until 2016. We welcome this commitment.”

As part of the restructuring, SSE said it would legally separate its wholesale and retail units by March 2015, seen as an effort to reposition the group in readiness for an expected antitrust probe into the energy sector.

SSE said the planned job cuts will be UK-wide, but has provided no further details as to which divisions will be affected, though SSE stressed there would be no compulsory redundancies.

SSE said part of its streamlining will involve shelving three planned offshore wind developments, withdrawing investment in biomass – which includes planned biomass partnership with Forth Ports, as well as wave power development currently being tested at four sites in Orkney.

Jim Smith, SSE’s managing director for generation development, said cuts in government subsidies for renewable energy developments, along with high set up costs, were a threat to offshore wind developments.

SSE will continue with its 750MW Beatrice offshore wind project in the Moray Firth but will offload its stake in Galloper wind farm in Suffolk and will shelve investment plans for the 690MW Islay wind farm.

The group said it has no “near term” plans to develop four offshore wind farms it has outline planning for in consortium’s within the SeaGreen project in the Firth of Forth and with Forewind at Dogger Bank offshore north-east England.

SSE said those plans, for a total of more than 4GW of potential power output, would remain on hold until it sees “sufficient confidence in the viability of the wider offshore wind sector”.

Last year SSE, which includes the Scottish Hydro and Southern Electric, was fined a record £10.5 million by the energy regulator Ofgem “for numerous breaches of its obligations relating to telephone, in-store and doorstep sales activities” linked to retail energy sales.

The regulator found “failures at every stage of the sales process” across SSE's sales activities covering a one to three-year period, which included providing "misleading and unsubstantiated statements" to residential customers to lure them into switching energy provider.

SSE reported in results for the financial year to March 2013 it had lost 80,000 retail customers in the year to leave 9.47 million customers in total.

Despite the loss of customers, SSE went on to report a 28 per cent rise in annual profits from its UK retail customers and a six per cent hike in group profits to £1.41 billion.

In a July 2013 update, SSE said another 100,000 customers had left in the first three months of the financial year, and by January of this year the number of customers leaving SSE in the current year had swelled to 250,000.

As of December 31, SSE said it had 9.22 million customers compared with 9.47 million at the same point a year earlier.

Despite the loss of customers, and an overall net reduction in consumer energy consumption, SSE said in its January update it was on track to deliver an eight per cent hike in full-year profits to £1.54 billion.

The company said in an update today it is on target to increase its full-year dividend to shareholders by around three per cent and will then target dividend payments in line with Retail Price Index inflation going forward.

This was despite SSE warning today full-year profits from energy supply will be down by a quarter against the previous year which it said was in part down to the milder than normal winter.

Shares in SSE were up more than one per cent in early trading on Wednesday.